China Considers Yuan-Pegged Stablecoins to Boost Global Influence

China is reportedly considering allowing stablecoins pegged to the yuan for the first time, signaling a major reversal in a country that previously banned cryptocurrency trading. The move is aimed at boosting the yuan’s influence globally and modernizing cross-border payments.

180-Degree policy shift in digital assets

If approved, this plan would represent a radical shift in Beijing’s approach to digital assets. In 2021, China banned cryptocurrency trading and mining over concerns about financial system stability. Now, authorities are exploring ways to internationalize the yuan while maintaining strict regulatory oversight.

The State Council, China’s cabinet, will consider and possibly approve a roadmap for expanding the yuan’s use globally later this month.

The document will set targets for international use, outline responsibilities for regulators, and define risk prevention measures.

First steps taken by Chinese blockchain projects

Even as the strategy is being discussed, the Chinese blockchain platform Conflux has already launched a stablecoin backed by the offshore yuan (CNH). 

This initiative targets cross-border payments, particularly under the One Belt, One Road program, which could transform payments between Asian, African, and European countries.

China has long sought to elevate the yuan to a global reserve currency on par with the U.S. dollar or euro, but tight currency controls and trade surpluses have limited progress. 

According to SWIFT, the yuan’s share of global payments fell to 2.89% in May, while the dollar holds 48.46%.

RMB’s share as a global payment’s currency. Source: SWIFT

A global context: dollar, stablecoins, and regional competitors

The U.S. has actively supported stablecoins, with former President Trump backing regulatory frameworks for dollar-denominated cryptocurrencies. Currently, U.S. dollar-based stablecoins account for over 99% of the global supply, according to the Bank for International Settlements.

Other countries are exploring national stablecoins as well. South Korea is planning won-pegged stablecoins, and similar initiatives are underway in Japan. Hong Kong’s new stablecoin law, effective August 1, positions it as a regulated hub for fiat-pegged stablecoins, complementing Shanghai as a center for the yuan’s digital expansion.